Correlation Between Algorand and IShares MSCI

Can any of the company-specific risk be diversified away by investing in both Algorand and IShares MSCI at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Algorand and IShares MSCI into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Algorand and iShares MSCI Brazil, you can compare the effects of market volatilities on Algorand and IShares MSCI and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Algorand with a short position of IShares MSCI. Check out your portfolio center. Please also check ongoing floating volatility patterns of Algorand and IShares MSCI.

Diversification Opportunities for Algorand and IShares MSCI

-0.54

Correlation Coefficient

Algorand  IShares MSCI

Excellent diversification

The 3 months correlation between Algorand and IShares is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Algorand and iShares MSCI Brazil in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on iShares MSCI Brazil and Algorand is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Algorand are associated (or correlated) with IShares MSCI. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of iShares MSCI Brazil has no effect on the direction of Algorand i.e., Algorand and IShares MSCI go up and down completely randomly.

Pair Corralation between Algorand and IShares MSCI

Assuming the 90 days trading horizon Algorand is expected to under-perform the IShares MSCI. In addition to that, Algorand is 4.48 times more volatile than iShares MSCI Brazil. It trades about -0.14 of its total potential returns per unit of risk. iShares MSCI Brazil is currently generating about 0.19 per unit of volatility. If you would invest  3,006  in iShares MSCI Brazil on December 24, 2024 and sell it today you would earn a total of  500.00  from holding iShares MSCI Brazil or generate 16.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	92.19%
Values	Daily Returns

Algorand  vs.  iShares MSCI Brazil

Algorand

Risk-Adjusted Performance

Very Weak

Over the last 90 days Algorand has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Crypto's fundamental indicators remain rather sound which may send shares a bit higher in April 2025. The latest tumult may also be a sign of longer-term up-swing for Algorand shareholders.

iShares MSCI Brazil

Risk-Adjusted Performance

Good

Compared to the overall equity markets, risk-adjusted returns on investments in iShares MSCI Brazil are ranked lower than 15 (%) of all global equities and portfolios over the last 90 days. In spite of fairly abnormal basic indicators, IShares MSCI showed solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Algorand and IShares MSCI

The main advantage of trading using opposite Algorand and IShares MSCI positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Algorand position performs unexpectedly, IShares MSCI can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in IShares MSCI will offset losses from the drop in IShares MSCI's long position.

The idea behind Algorand and iShares MSCI Brazil pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the ETF Categories module to list of ETF categories grouped based on various criteria, such as the investment strategy or type of investments.